Biz Break: Silicon Valley controls the digital advertising market

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(FILES)This January 11, 2011 screen file image shows the Google logo in Washington, DC. Google released its quarterly earnings October 18, 2012 reporting that profit declined twenty percent as total cost rose and advertising prices continued to fall. The results missed expectations and the company released its results several hours earlier than expected. AFP PHOTO/KAREN BLEIER / FILESKAREN BLEIER/AFP/Getty Images

According to Wednesday’s report, Google, Facebook and Yahoo commanded the top three spots for total digital advertising in 2012, and will again in 2013, when Google is expected to grow its market share from 31.5 percent to 32.8 percent. No other company is expected to pull in even close to a double-digit percentage share of the market, with Facebook projected to grow from 4.1 percent to 5.4 percent and Yahoo (YHOO) forecast for a drop from 3.4 percent to 3 percent.

Facebook’s gains will mostly come from mobile, with the Menlo Park social network’s recent quarterly earnings showing off tremendous progress in the field. In mobile advertising, Google’s advantage is even more pronounced: The Mountain View search giant commanded more than half of the market in 2012, and eMarketer expects that percentage to grow from 52.4 percent to 53.2 percent in 2013. However, Facebook is expected to make greater gains, from 5.4 percent in 2012 to 15.8 percent in 2013.

Mobile is primed for growth, giving credence to investors who have pushed Facebook’s stock price up on hopes that the company can realize its growth potential in the market. “The overall mobile ad market worldwide is expected to grow 89% to $16.65 billion in 2013,” eMarketer reported.

Another Silicon Valley company is expected to jump up to third in mobile ad market share in 2013, and it could surprise some onlookers: Pandora Media is expected to top YP.com with 2.4 percent of the mobile market. The Oakland company is also outpacing Twitter, which is fifth on the mobile-advertising list, and matches the buzzy San Francisco microblogging service in overall digital advertising, with both companies projected to score $580 million in total digital advertising revenues in 2013.

In total, Web advertising is expected to be a $117.6 billion industry in 2013, after breaking $100 billion for the first time in 2012. Google is expected to pull in $38.6 billion alone, Facebook’s piece of the pie is projected to grow from $4.3 billion to $6.4 billion, while Yahoo stays steady at $3.5 billion.

Google was the only Silicon Valley company mentioned in eMarketer’s report to decline Wednesday, falling 0.2 percent to $848.55, its lowest closing price since early May. Facebook gained 2.3 percent to $40.55, Yahoo increased 0.4 percent to $22.28, and Pandora moved 1.3 percent higher to $18.39.

The most valuable company in Silicon Valley and the United States, Apple, helped push those gains along with a 0.5 percent advance to $490.90. The Cupertino company, not known as a serial acquirer like other Silicon Valley powerhouses, confirmed its sixth acquisition of the past month, paying an undisclosed price for Sweden’s Algotrim, which makes data-compression technology. Apple is also reportedly looking to open its first new Tokyo store since 2005.

And the widely watched Standard & Poor’s 500 index: Up 4.48, or 0.27 percent, to 1,634.96

Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.